126 THE GENERAL THEORY OF EMPLOYMENT BK. III

Thus when 5,200,000 men are employed themultiplier is very large, namely 50, but investment isonly a trifling proportion of current income, namely,0.06 per cent.; with the result that if investment fallsoff by a large proportion, say about two-thirds, employ-ment will only decline to 5,100,000, i.e. by about 2 percent. On the other hand, when 9,000,000 men areemployed, the marginal multiplier is comparativelysmall, namely 2½, but investment is now a sub-stantial proportion of current income, namely, 9 percent.; with the result that if investment falls by two-thirds, employment will decline to 6,900,000, namely,by 23 per cent. In the limit where investment fallsoff to zero, employment will decline by about 4 percent, in the former case, whereas in the latter case itwill decline by 44 per cent.1

In the above example, the poorer of the two com-munities under comparison is poorer by reason ofunder-employment. But the same reasoning appliesby easy adaptation if the poverty is due to inferior skill,technique or equipment. Thus whilst the multiplieris larger in a poor community, the effect on employ-ment of fluctuations in investment will be much greaterin a wealthy community, assuming that in the lattercurrent investment represents a much larger propor-tion of current output.2

1 Quantity of investment is measured, above, by the number of menemployed in producing it. Thus if there are diminishing returns per unitof employment as employment increases, what is double the quantity ofinvestment on the above scale will be less than double on a physical scale(if such a scale is available).

2 More generally, the ratio of the proportional change in total demandto the proportional change in investment

= ΔY/Y / ΔI/I = ΔY/Y . Y- C/ΔY-ΔC = 1 - C/Y / 1 - dC/dY

As wealth increases dC/dy diminishes, but C/Y also diminishes. Thus the fraction

increases or diminishes according as consumption increases or diminishes ina smaller or greater proportion than income.